Wages, Promises and Effort in an Intercultural Labour Market: Experimental Evidence from Australia Tony Beatton, Uwe Dulleck, Jonas Fooken and Markus Schaffner* Abstract In this article, we use economic experiments to explore the role of culture in labour market interactions between Australian employers and either Australian or Asian workers. We use two variants of the gift exchange game. In one, employers make binding, in the other non- binding, wage offers. Results show that attitudes and behaviour are similar across cultural groups, but intercultural interaction changes between the games. Non-binding wage offers are completely disregarded in final wage decisions by employers when made to Asians. However, Asians are rewarded more for additional effort. 1. Introduction Australia has a traditionally high intake of migrants and their integration into the labour market has been seen as successful, for example, by the Organisation for Economic Co-operation and Development (OECD) (Liebig 2007). This OECD report argues that main reasons for this are a highly selective immigration policy requiring very high levels of (English)-language competence and high skill levels, preferably based on Australian qualifications. However, the characteristics of migrants have partly changed in the last decades with increasing shares of migrants from Asia, with China for the first time surpassing the United Kingdom as the modal country of origin in 2010–2011 (Phillips and Simon-Davies 2017). Comparing the country of birth of the estimated resident population between the OECD report and today shows that the shares of individuals with European origin are decreasing, relative to those with Asian origin, such as China, India or Philippines (ABS 2013). Although Australia has been increasingly diverse since the 1970s, the role of more diverse cultural backgrounds, particularly with increasing fractions of non- native English-speakers, may therefore play a more important role for economic outcomes today than 10 years ago. For example, the United Kingdom, New Zealand and South Africa accounted for more than 30 per cent of new arrivals from 1999 to 2009, but only for about 20 per cent in 2013–2015. 1 That people from different cultural back- grounds behave differently, particular in social interaction, is part of dictionary definitions of culture and confirmed by experience when dealing with someone from a different culture. 2 Cultural differences in behaviour exist on many levels and can be gradual, starting * Beatton, Dulleck and Schaffner: School of Economics and Finance, Queensland University of Technology, Queensland 4001 Australia; Fooken: Centre for the Business and Economics of Health, University of Queens- land, Queensland 4072 Australia. Corresponding author: Fooken, email <jonas.fooken@gmail.com>. The Australian Economic Review, vol. 50, no. 3, pp. 257–77 ° C 2017 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research Published by John Wiley & Sons Australia, Ltd